Namibia’s economy expands by 7%

Namibia managed year-on-year growth of 7,2% in the third quarter of 2023, mainly thanks to its well-performing mining and agriculture sectors.

“This was another strong quarter for Namibia, mainly driven by exceptional performance in the mining sector, which recorded a 51,7% year-on-year growth rate as uranium spot prices continue to rise sharply, and mines did not face water supply challenges (as seen in previous years),” financial services firm Cirrus Capital says.

The agriculture sector followed with 19,9% year-on-year growth, driven by increased livestock marketing. The firm says farmers, anticipating reduced rainfall in the upcoming season, have strategically engaged in more livestock transactions.

“Second quarter 2023 real gross domestic product (GDP) growth was also revised upwards from 3,7% to 5,5%, also led by exceptional mining performance, which was revised from an already impressive growth rate of 32% to a whopping 52,3%,” Cirrus Capital says.

Throughout the year, uranium spot prices have showcased an upward trend, demonstrating a steady climb.

From averaging US$50,7 per pound in the first quarter, and US$54,7 per pound in the second quarter, they peaked at US$62,6 per pound in the third quarter.

“The fourth quarter promises to be another fruitful quarter, with the average monthly uranium spot price in October and November standing at US$74,7 and US$81,3 per pound,” Cirrus Capital says.

The 7,2% year-on-year GDP growth has sparked optimism, but independent economic researcher Josef Sheehama is cautious.

“At face value when real GDP is growing strongly, employment is likely to be increasing as businesses employ more workers and people have more money in their pockets. It is important to understand what GDP cannot tell us. Hence, GDP is not a measure of the overall standard of living or well-being of a country,” he says.

Sheehama urges diversification beyond the mining sector, highlighting vulnerability to market slowdowns.

“A lack of diversification poses a serious economic risk,” he warns.

Examining GDP factors, Sheehama notes animal husbandry’s role, but flags concerns due to looming drought.

He anticipates growth constraints due to slower economic activities and external challenges, emphasising the impact on consumption.

“Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to moderate,” Sheehama says.